Complementarity without Superadditivity
NBER Working Paper No. 22811
The distinction between complements, substitutes, and independent goods is important in many contexts. It is well known that when consumers’ conditional indirect utilities for two goods are superadditive, the goods are gross complements. Generalizing insights in Gans and King (2006) and Gentzkow (2007), we show that superadditivity between one pair of goods can also introduce complementarity between competing pairs of goods. One implication is that lower prices can result from a merger between producers of goods that themselves offer no superadditivity.
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Document Object Identifier (DOI): 10.3386/w22811
Published: Berry, Steven & Haile, Philip & Israel, Mark & Katz, Michael, 2017. "Complementarity without superadditivity," Economics Letters, Elsevier, vol. 151(C), pages 28-30. citation courtesy of
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